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While both parents must be working to qualify, those temporarily absent from the workplace such as those on paid or unpaid maternity, paternity or adoption leave will still be eligible.

How does it work?

Parents will be able to apply by opening an online account - provided by NS&I - which will be available through the government’s website www.gov.uk .

They pay into this account, which is then topped up by the government to cover the cost of childcare.

You can open one account per child (up to the age of 12 - or 17 if disabled) and deposits up to £8,000 in each will be rewarded with the maximum government contribution of £2,000 (or £4,000 if the child is disabled).

You can save more than £8,000 in each account but any extra will not earn a top-up.

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The scheme will be gradually rolled out to all eligible families throughout 2017, starting with the parents of the youngest children first.

Parents will then need to re-confirm their circumstances every 3 months.

It is possible to pay in more some months, and less at other times, meaning parents can build up a balance in their account to cover times when they need more childcare than usual - for example during the summer holidays.

How can I sign up?

Once you’ve applied to open an account through gov.uk , HMRC will check you are eligible for the scheme and, if you are, NS&I will open it for you.

You’ll be able to apply for all your children at the same time, when your youngest child becomes eligible. All eligible parents will be able to join the scheme by the end of 2017.

What’s the age limit?

It will be available for children up to the age of 12, or for those with disabilities, up to the age of 17.

This is because their childcare costs can stay high throughout their teenage years.

Three things you should know

1. You can continue to receive Employer-Supported Childcare

You do not have to switch to tax free childcare if you do not wish to. Employer-Supported Childcare will continue to run.

The current scheme will remain open to new entrants until April 2018. Parents already registered by this date will be able to continue using it for as long as their employer offers it